Q3 2023 Sony Group Corp Earnings Call

I am Okada corporates communications service unless those ceremonies.

The people on the stage I missed it but you don't get the Turkey, President COO and CFO.

MS Snowe me Matsuoka senior Vice President in charge of corporate planning and control leadoff group with diversity and inclusion support for financial services and entertainment area.

Mr. So that he can go higher Keller senior Vice President in charge of finance and I are at.

These three people will be extending their fi twenty-three Q3 results and full year forecast.

Followed by Q&A.

I don't know 70 minutes is allocated and he said I thought I'll give the floor is yours.

Today after I missed him on silica and Mr. Hayakawa explain the context shown here I will summarize the entire earnings briefly Mr. Hayakawa. Please go ahead.

But the OCA and how to go about weeks thing.

Consolidated sales for the quarter were three two young $747 5 billion, a significant increase of 22% compared to the same quarter of the previous fiscal year, a record high on a quarterly basis and the consolidated operating income increased $41 8 billion yen year on year.

Two $463 3 billion yen the second highest level on a quarterly basis net income increased $42 4 billion yen year on year to $363 9 billion yen and adjusted EBITDA increased $75 5 billion yen due 605.

In yen.

Nine months cumulative consolidated operating cash flow, excluding the financial services segment was $618 5 billion yen.

The full year forecast is for sales to be two trillion 302 billion a decrease of 100 billion yen from the previous forecast for operating income to be once you do 180 billion an increase of 10 billion yen from the previous forecast and for net income to be the habit, then 20 billion yen.

An increase of 40 billion from the previous forecast adjusted EBITDA is expected to be one trillion and 770 billion yen a decrease of 15 billion yen from their previous forecast, primarily reflecting the impact of the foreign exchange rate on nonoperating profit and loss of consolidated operating cash flow forecast.

Excluding the financial services segment is expected to be one Julien 80 billion yen a decrease of 80 billion from the previous forecast, mainly reflecting an increase in working capital in the D and S segment now I will move on to overview of each business segment first is D and and their segment FY 'twenty.

Three Q3 sales increased a significant 60% year on year due one to yield $444 4 billion yen, primarily due to increased third party software sales and the impact of foreign exchange rates operating income decreased significant 30.1 billion yen year on year two.

H 6.1 billion yen, primarily due to a deterioration in the profitability of Playstation five hardware, mainly due to promotions and adjusted Oi B D. A decreased $26 8 billion yen $213 1 billion in the full year forecast is for sales to be 40 150 billion.

Onion, a decrease of 210 billion yen from their previous forecast and the operating income and adjusted or I B D remain unchanged.

Century related reserves that additionally, recorded in the current quarter, mainly due to an increase in inventory, resulting from the decline in P. S. Five unit sales in the current quarter are expected to be recorded as a recovery gain in the fourth quarter due to a decrease in the inventory as a result, there is no impact.

Software sales and the impact of foreign exchange rates operating income decrease significant 30.1 billion yen year on year to 86.1 billion yen, primarily due to a deterioration in the profitability of Playstation five hardware.

On a full year operating income forecast, but there is an expected shift in profit of approximately 30 billion yen from the current quarter to the fourth quarter.

Due to promotions and adjust it all I B D. A decreased $26 8 billion yen 213.1 billion yen.

P. S. Five hardware unit sales in the quarter were $8 2 million units, which fell short of the target to hit our annual shipments of 25 million units.

What are your forecast is for sales to be 40, 150 billion a decrease of 210 billion yen from their previous forecast and operating income and adjusted or I B D remain unchanged inventory related reserves.

But what's a record high number of quarterly unit sales for P. S. Five.

And accumulative yourselves have exceeded 50 million units.

Additionally, recorded in the current quarter, mainly due to an increase in inventory, resulting from the decline in P. S. Five unit sales in the current quarter are expected to be recorded as a recovery gain in the fourth quarter due to a decrease in inventory as a result, there is no impact on our full year operating income forecasts.

Due to the impact of the increasing popularity of P. S. Five and third party a free to play hit titles.

Key user engagement metrics have increased significantly with monthly active users for all our peers in December reaching a record high of 120 million accounts and total game play time for the quarter, increasing 13% year on year.

But there is an expected shift in profit of approximately 30 billion yen from the current quarter to the fourth quarter.

P. S. Five hardware unit sales in the quarter were $8 2 million units, which fell short of the target to hit our annual shipments of 25 million units.

Based on the results for this quarter P. S. Five unit sales for this fiscal year are expected to be around 21 million units.

But what's a record high number of quarterly unit sales for P. S. Five.

Regarding your first party software the cumulative sales of Marvel's Spider Man, two which was released in last October exceeded 10 million copies as of February 4th.

And accumulative yourselves have exceeded 50 million units.

Due to the impact of the increasing popularity of P. S. Five and third party a free to play hit titles.

And the Marvel's Spiderman game series has now sold through over 50 million units, including on P. C.

Key user engagement metrics have increased significantly with monthly active users for all our peers in December reaching a record high of 120 million accounts and total game play time for the quarter, increasing 13% year on year.

The game is our second the blockbuster hit in two years following God of War Ragnarok, which was released in the same period last year and is making a major contribution to profit.

Regarding network services, despite the impact of a slight year on year decrease in the number of PS plus subscribers.

Based on the results for this quarter P. S. Five unit sales for this fiscal year I expect it to be around 21 million units.

Sales increased 11% year on year, mainly due to the impact of a further shift to higher end services and price revisions.

Regarding your first party software the cumulative sales of Marvel's Spider Man, two which was released in last October exceeded 10 million copies as of February 4th.

Now I would like to explain our current view on the outlook for this segment next fiscal year.

Regarding the abuse five hardware, which will enter its fifth year since launch partially due to its entering the latter half of the console cycle, we aim to optimize cells with a greater emphasis on balance with profits. So we anticipate a gradual decline in unit sales from next fiscal year.

And the Marvel's Spiderman game series has now sold through over 50 million units, including on P. C.

The game is our second the blockbuster hit in two years following God of War Ragnarok, which was released in the same period last year and is making a major contribution to profits.

Words.

We expect third party software sales to continue to expand gradually due to the expansion of the PS five installed base and the high level of user engagement.

Regarding network services, despite the impact of a slight year on year decrease in the number of PS plus subscribers.

Sales increased 11% year on year, mainly due to the impact of a further shift to higher end services and price revisions.

In network services, we expect subscribers to be on par with this fiscal year or slightly less due to the impact of price revision. We implemented in this fiscal year, but we expect sales to gradually expand due to a shift to attractive premium services.

Speaker Change: Now I would like to explain our current view on the outlook for this segment next fiscal year.

Speaker Change: Regarding it appears five hardware, which will enter its fifth year since launch partially due to its entering the latter half of the console cycle, we aim to optimize cells with a greater emphasis on balance with profits. So we anticipate a gradual decline in unit sales from next fiscal year.

Regarding first party software, we aim to continue to focus on producing high quality works and developing live service games, but one major projects are currently under development, we do not plan to release any new major existing franchise titles next fiscal year like God of war.

Speaker Change: Got it.

Speaker Change: We expect third party software sales to continue to expand gradually due to the expansion of the P. S. Five installed base and the high level of user engagement.

<unk> and Marvel Spider Man two.

The burden of acquisition related costs will ease next fiscal year, we expect profit from first party software to decrease slightly from this fiscal year.

Speaker Change: In network services, we expect subscribers to be on par with this fiscal year or slightly less due to the impact of price revision. We implemented in this fiscal year, but we expect sales to gradually expand due to a shift to attractive premium services.

Due to the impact of the decrease in sales.

Based upon this operating income for the next fiscal year is currently expected to increase slightly from this fiscal year.

Well. This is a baseline we are reviewing measures for further improvement in profitability in events in advance of their nose annual forecast our results announcement. This may.

Speaker Change: Regarding first party software, we aim to continue to focus on producing high quality works and developing live service games, but well major projects are currently under development, we do not plan to release any new major existing franchise titles next fiscal year like God of war.

Next is the music segment.

23, Q3 sales increased 16% year on year to $422 1 billion yen and operating income increased $13 1 billion yen to $76 1 billion yen both significant increases.

Speaker Change: Robin Iraq, and Marvel Spider Man two.

Speaker Change: Although the burden of acquisition related costs will ease next fiscal year, we expect profit from first party software to decrease slightly from this fiscal year.

Adjusted O IBD, a increased $19 9 billion yen year on year to $98 5 billion yen.

Speaker Change: Due to the impact of the decrease in sales.

Streaming revenue for the quarter on a U S dollar basis continued to grow increasing 12% for recorded music and 17% for music publishing.

Speaker Change: Based upon this operating income for the next fiscal year is currently expected to increase slightly from this fiscal year how.

Profit contribution from a visual media and platform of the mid single digits percentage of the operating income of the segment.

Speaker Change: However, while this is a baseline we are reviewing measures for further improvement in profitability in events in advance of the announced annual forecasted results announcement. This may.

The FY2023 forecast is for sales to increase 10 billion yen from the previous forecast of one trillion 570 billion yen.

Speaker Change: Next is the music segment.

Speaker Change: 23, Q3 sales increased 16% year on year to $422 1 billion yen and operating income increased $13 1 billion yen to $76 1 billion yen both significant increases.

<unk> income to be unchanged in adjusted Oi B D E ink to increase 10 billion yen to 360 billion yen.

Speaker Change: Adjusted or IBD, a increased $19 9 billion yen year on year to $98 5 billion yen.

In recent years expansion of our streaming market has greatly expanded the revenue opportunities in asset value of music catalogs that have been released for a certain period of time.

Speaker Change: Streaming revenue for the quarter on a U S dollar basis continued to grow increasing 12% for recorded music and 17% for music publishing.

During the quarter.

So total streams of five of our holiday song catalogs by our artists exceeded 1 billion in the United States.

Speaker Change: Profit contribution from a visual media and platform was up mid single digits percentage of the operating income of the segment.

Mariah Carey's Alba Merry Christmas ranked in the top 10 of S. M. He's album sales for the quarter.

Speaker Change: The FY2023 forecast is for sales to increase 10 billion yen from the previous forecast of one trillion 570 billion yen operating income to be unchanged in adjusted Oi B D E ink to increase 10 billion yen to 360 billion yen.

29 years after it was released.

In music publishing their use of catalogs synchronized with images such as background music for movies and advertisement is also an important source of revenue.

Today, we have established a strong foundation that we will expect that we expect will contribute to achieving stable revenue and expanding our market share and a big music business by acquiring the publishing rights to the large catalog works led by EMI music publishing in the catalogs of industry, leading artists such as Bruce.

Speaker Change: In recent years expansion of our streaming market has greatly expanded the revenue opportunities in asset value of music catalogs that have been released for a certain period of time.

Speaker Change: During the quarter.

Speaker Change: Total streams of five of our holiday song catalogs by our artists exceeded 1 billion in the United States.

<unk> and Paul Simon.

Yeah.

Moreover, depending on the rights for each catalog, we plan to expand opportunities to use the music and are working to create new revenue such as in the artist merchandize any event promotional areas.

Mariah Carey's Alba Merry Christmas ranked in the top 10 of S. M ease album sales for the quarter.

Speaker Change: 29 years after it was released.

Of the four major awards presented at the 66 Grammy Awards on February 5th.

Speaker Change: In music publishing the use of catalogs synchronized with images such as background music for movies and advertisement is also an important source of revenue.

Miley Cyrus one record of the year.

And Victoria Monet won best New artist.

Speaker Change: Today, we have established a strong foundation that will expect that we expect will contribute to achieving stable revenue and expanding our market share in our music business by acquiring the publishing rights to the large catalog works led by EMI music publishing in the catalogs of industry, leading artist such as Bruce.

Sony Music group artists and songwriters won awards and multiple other categories, including Caesar, who was nominated in nine categories. The most of any artist this year and one in three.

Speaker Change: Steve and Paul Simon.

Then next is the pictures segment and our current quarter sales increased by 10% year on year to $366 3 billion yen and operating income increased significantly 160, a 16.2 billion yen year on year to $41 6 billion yen mainly due.

Speaker Change: Moreover, depending on our rights for each catalog, we plan to expand opportunities to use the music and are working to create new revenue such as in the artist merchandize any event promotion areas.

Speaker Change: Of the four major awards presented at the 66 Grammy Awards on February 5th.

Increases in TV and digital streaming licensing revenues and home entertainment sales in motion Pictures.

Miley Cyrus one record of the year.

Oh, I B D. A increased $16 3 billion yen year on year to 56 point $54 6 billion yen. The FY2023 forecast is for sales to increase 10 billion yen from the previous forecast to one trillion 470 billion yen and for operating income and adjusted O IBD Eh.

Speaker Change: And Victoria Monet won best New artist.

Speaker Change: Sony Music group artists and songwriters won awards and multiple other categories, including Caesar, who was nominated in nine categories. The most of any artist this year and one in three.

They will remain unchanged, although the Hollywood strikes are finally ended.

Speaker Change: Then next is the pictures segment and our current quarter sales increased by 10% year on year to $366 3 billion yen and operating income increased significantly 160 of $16 2 billion yen year on year to $41 6 billion yen mainly due.

Delays in script development have caused continued changes in movie release schedules and delays in the delivery of television shows as a result, we estimate the impact of the strikes on profits in our current fiscal year to be a little less than 20 billion yen.

Next fiscal year. In addition to continued delays in releases. It is it is expected that digital streaming licensing and other revenues will decline due to a decrease in the number of films released this fiscal year. So the negative impact on profits due to the strikes is expected to reach its peak and the amount of <unk>.

Speaker Change: Increases in TV and digital streaming licensing revenues and home entertainment sales in motion Pictures.

Speaker Change: <unk>, Oh, IBD, a increased $16 3 billion yen year on year to 56 point Phil.

Speaker Change: <unk> four 6 billion yen the FY2023 forecast is for sales to increase 10 billion yen from the previous forecast to one trillion 470 billion yen and for operating income and adjusted or IBD eight they will remain unchanged. Although the Hollywood strikes are finally ended.

Such impact on our U S. Dollar basis is expected to be slightly less than twice as much as in our current fiscal year on the other hand, the paying subscribers a crunchy rule, which is driving growth in this segment exits exceeded 13 million as of the end of December last year and have expanded at an average pace of 23% a year.

Speaker Change: Delays in script development have caused.

Changes in movie release schedules and delays in the delivery of television shows as a result, we estimate the impact of the strikes on profits in our current fiscal year to be a little less than 20 billion yen next.

We acquired the business in August 2021 in addition to continuing to provide it.

Appealing anime content to core fans, we are focusing on measures to broaden the anime fan base and deepen engagement by collaborating with external partners such as <unk>.

Speaker Change: Next fiscal year. In addition to continued delays in releases. It is it is expected that digital streaming licensing and other revenues will decline due to a decrease in the number of films released this fiscal year. So the negative impact on profits due to the strikes is expected to reach its peak and the amount of <unk>.

Amazon expanding the service into growth markets, such as Brazil, India, and Southeast Asia, and further expanding in business areas, such as theatrical distribution animated movies and E Commerce.

Amortization costs associated with the acquisition are expected to decrease significantly from next fiscal year onwards, and we expect this to further contribute to profit in this segment for the next fiscal year, despite the challenging environment, where the impact from the strikes on.

Speaker Change: Such impact on our U S. Dollar base is expected to be slightly less than twice as much as in the current fiscal year on the other hand, the paying subscribers a crunchy rule, which is driving growth in this segment exceeded 13 million as of the end of December last year and have expanded at an average pace of 23% a year.

Profitability expects is expected to increase we are aiming for a level of operating income that exceeds the current fiscal year and so we intend to further grow our crunchy role business develop and produce content all over the world and hence theatrical distribution by distributing films from third Party studios and maintain a strong focus on cost.

Speaker Change: We acquired the business in August 'twenty 'twenty. One in addition to continuing to provide it.

Speaker Change: Appealing anime content to core fans, we are focusing on measures to broaden the anime fan base and deepen engagement by collaborating with external partners such as <unk>.

Control next is the entertainment technology and services segment.

Amazon expanding the service into growth markets, such as Brazil, India, and Southeast Asia, and further expanding in business areas such as theatrical distribution of anime movies in E Commerce.

23, Q3 sales decreased 2% year on year to 700, and a $35 7 billion yen, mainly due to lower sales of televisions and operating and.

Speaker Change: Amortization costs associated with the acquisition are expected to decrease significantly from next fiscal year onwards, and we expect this to further contribute to profit in this segment for the next fiscal year, despite the challenging environment, where the impact from the strikes on.

And operating income decreased $3 9 billion yen to $77 2 billion yen and adjusted O. IBD a was 103 point.

4 billion yen down 1.9 billion yen the FY2023 forecast is for sales to decrease 10 billion yen from our previous forecast to two trillion of 430 billion yen and for operating income and adjusted or IBD, a they all IBD a day will remain unchanged.

Speaker Change: Profitability expects is expected to increase we are aiming for a level of operating income that exceeds the current fiscal year and so we intend to further grow our crunchy role business develop and produce content all over the world and hence theatrical distribution by distributing films from third Party studios and maintain a strong focus on cost.

In North America.

Speaker Change: Control next is the entertainment technology and services segment FY 'twenty, three Q3 sales decreased 2% year on year to $735 7 billion yen, mainly due to lower sales of televisions and operating.

As expected growth was not being made there was no sign of major declines in demand unexpected themselves for a relatively steady in the Chinese market Balti brownfield Charlestown fell sharply.

So there's no term of was higher than expected novel performance was roughly in line what the expectation. Furthermore, as a result of careful production on self control.

Speaker Change: And operating income decreased $3 9 billion yen to $77 2 billion yen and adjusted O. IBD a was 103 point.

Speaker Change: 4 billion yen down 1.9 billion yen the FY2023 forecast is.

Over at the entry level in the segment at the end of.

December was significantly reduced to $341 3 billion young an 18% decrease year on year recording televisions in the fourth quarter.

To further reduce inventory and reduce costs based on results of the year end selling season.

Regarding digital camera phone the interchangeable lenses and aim to continue to expand our businesses, including through the introduction of new products to the market next is the imaging and sensing solutions segment before I turn 33 sales for the quarter increased significantly 20% 21 person.

Year on year to $505 2 billion yen, primarily due to our increasing sales of image sensors for mobile on the operating income increased 14.9 billion yen to 99 point something billion young both new record high for that segment.

Just Oh Iberia increased 29.0 billion yen year, two year $263 7 billion young FY2023 forecast is unchanged from the previous forecast, we believe that smartphone product market, which has continued to experience negative growth compared to the last calendar year has hit.

The bottom in the current quarter, but the North America market is still showing declines compared to the last calendar year and there is still uncertainty in the outlook.

During this quarter.

Self.

Increased significantly year on year, primarily due to a recovery of the smartphone product market and the introduction of bird sides sensors for high end products. Nevertheless, we plan to continue to operate our business cautiously for the time being while continuing to monitor product market trends on the event.

Free status the yield rate of mobile sensors, which is the most important issue for current fiscal year is progressing following the improvement curve assumed in our previous forecast and the impact on profitability has not changed from the previous forecast.

During the festival business other than the mobile sensor the delay in recovery in the sensor market for industrial and social and fractures has become particularly noticeable. So we plan to proceed with positions us months and improve inventory in the fourth quarter.

And the second one during the current midrange plan are expected to grow significantly by an average of 22% year on year basis, and 8% on U S. Dollar basis, we have been able to steadily transition our mobile fasteners to become merger are more value added and we believe.

We will be able to continue to grow our business in a period of the next mid range, but on the other hand at a time when cells are not increasing as planned primarily due to the market environment. We recognize that significant increase in manufacturing costs, mainly due to a high point expenditure and production operational losses such as.

Those brought on Oh, Oh by deterioration of yields out issues that needs to be addressed in order to further improve profitability going forward regarding your main sensor type of exposure in our preordered Max Midrange plan, we plan to leverage production capacity on strategy can vary the tree or built.

Ahead of time to optimize and invest them lastly, there is a financial service segment for the current quarter, mainly due to the impact of market fluctuation on Sony Life's financial services revenue increased $287 3 billion yen year on year to $311 7 billion and your operating income increased $30 2 billion yen.

77.3 billion yen, both forget African decrease.

Oh, IBD increased 3.5 billion yen year on year to $84 3 billion yen fully lives cumulative new policy amount in force. During the nine months ended December 31, 2023 continue to grow steadily increasing 22% year on year or two several 0.3 truly union.

FY2023 financial Services' revenue is expected to increase 19 billion from our previous forecast to one truly on 300 billion yen on the operating income is expected to increase 20 billion young from the previous forecast 275 billion yen.

In the reporting of our gain mainly from the transfer of a portion of the sharp Sony and payment services, Inc. By Sony Bank or just the IBD I is unchanged from the previous forecast.

Please note that the forecast and corporate costs associated with profit quality group and leisure at Sony life going forward, excluding the record of the gain mainly from the transfer of all I. Just mentioned, we have made no change of our previous forecast finally, I would like to speak about the main points regarding the forecast for this fiscal year.

Outlook for each business in next fiscal year and beyond regarding the outlook for the current fiscal year consolidated operating income for the quarter reached a level approaching the record high level achieved in the third quarter of the fiscal year ended March 31st two until 'twenty, two and I think we have created good momentum towards completing the car.

Midrange growth looking ahead to the next fiscal year.

The G N N S segment, we expect operating income to slightly increase from the current fiscal year as the gradual growth in third party software and network services due to the expansion of P. S <unk> installed base.

Seth a decreasing profit from first party software in the picture of Sacramento to the impact of the strikes is this factor to peak next fiscal year, we're aiming for a level of operating income that exceeds the current fiscal year, mainly due to the expected growth of control development of our global production through controlled.

Costs in the I N S segment, we expect moderate sales growth due to a recovery of the smartphone market as well as increasing the size and value added of mobile sensors, which have been promoting to date.

Regarding image sensor capital expenditure during the period of the next midrange plan. We currently assume that we will be able to keep it to approximate 70% to 80% of the carbon midrange plan period by taking full advantage of our existing production facility in transit inventory and in the financial services segment, we were able.

Well to obtain approval for the corporate restructuring plan for partial spin off and our doctor of segmenting industrial competitiveness of Japan.

Based on the approval we are walking in honest to prepare for the spinoff on lifting of those shares up Sony Financial Group, Inc. In October 25, that's all for my explanation.

Thank you very much have given presentation by Turkey and myself from 425, we have Q&A from India and from 450, Q&A for investors and analysts and 20 minutes for each Q&A session. Those of you who have registered for asking questions. He knows.

Please connected to the number that we have already designated to you.

As for the way of asking questions and points to note a place like Ed said invitation letter in AR that we have sent to you in advance play to wait until the Q&A session begins.

[music].

Thank you for waiting.

Food now entertain questions from the media.

As was the case of presentation and then people are shown on the slide are the people who were responding to your questions that can now begin the Q&A session. If you would have to ask you to limit your questions to two questions per person. If you have any question. Please press the district followed by one.

Yeah.

The first question is just for my son from Nikkei Shimbun newspaper cause to me Sir the floor is yours.

So to me from Nikkei Shimbun.

I have two questions.

First question.

There are statistical investment and the Capex of the current midterm mid range plan.

And you referred to this in the semiconductor group as a whole.

If I 21 to the end of this fiscal year in three years.

And they'll say a day, how much it would be the amount of investment.

Also based upon that.

Next mid range plan.

<unk> investment and the Capex, what would be the direction and the sites.

What do we do with the level of investment.

Are there going to be increasing.

Our strategic investment to increase by the Capex will be flat can you. Please give us their direction and also that ties.

The second question.

In the medium term.

ROIC forecast for each business segment entertainment.

And semiconductors.

Right.

Applications.

Can you say it was a drag.

Drive growth the products and services as well.

Can you please elaborate there.

My two questions. Thank you.

Thank you very much for your questions. Your first question regarding the current mid range.

Plan, and a statistical investment and capital expenditure from FY 'twenty, one through FY2023.

Three our accumulative amount capex it will be about 1.9 to union M&A and other strategic investment is 1.8 trillion yen.

And that is our forecast.

The investment is progressing as steadfastly so in the medium.

Tammy this investment to bear fruit.

Yeah.

And then.

Next mid range plan and the size of the investment in the direction of investment.

Officially in spring of next fiscal year, we would like to give you.

Exploration Capex.

I and this investment.

As compared to the past it will be 70% to 80%, 80% I explained in my presentation.

The largest amount Oh geez is of the Capex It is investment and I and S. S.

There will be a slight increase in investment in this area with regards to statistic investment there are opportunities that we have to look at so it's very difficult to say it precisely but about the same level as this fiscal year or might be a slight decrease from this year statistically investing.

Meant I didn't know include return to the shareholders, so including that we have to think about statistical investment.

And then from next year the direction of ROIC.

Entertainment area.

The driver of the ROIC will be games.

And in terms of improvement music, we have expectations for improvement in the music music in that current meet our mid range plan acquisition of light catalogs.

And the foundation of the business and the competitors have been strengthened going for it based upon the catalog of base, we are going to further.

Expand this that's all from me thank you.

Yeah.

Next question.

Okay.

Mr Minarchy from Toyo Keizai.

Yes.

Until your Securities I have two questions. The first question is.

About the spin off that was released today.

When I read this.

By implementing this spinoff.

Entertainment.

And other areas that you are focusing on.

<unk> will not bring in any cash so the purpose of conducting the spinoff and also trying to improve the business. What is the relationship between the two my second question has to do with has to do with Indian a strategy.

So I understand that you're in negotiations with Z are for merger didn't it wasn't successful.

I understand that you spend some time, explaining about India, but Ah Ah.

Are you thinking about changing your strategy.

What would you do with that investment and you were thinking about that merger how will you use that money and thank you for the question about the financial spin off.

So the purpose of conducting this spin off.

And also trying to improve the business what is the relationship between the two my second question has to do with <unk>.

Regarding that point as you know.

Has to do with Indian a strategy.

We will do a actual we will not use any cash of.

So I understand that you know negotiations with Z.

For merger didn't it wasn't successful.

But on the balance sheet I think theres about <unk> 20 trillion yen asset and liability are recorded and if we streamline that.

I understand that you spend some time, explaining about India, but.

Are you thinking about changing your strategy.

What would you do with that investment and you were thinking about that merger how will you use that money I. Thank you for the question about the financial spin off.

And then business our capital allocation.

Will it become easier to handle.

On the other hand in our financials.

Regarding that point as you know.

By.

We will do a actual we will not use any cash of.

They can of course have tried to grow on their own because they're going to become a listed company. So for both companies I think this will be a win win situation that is our aim.

But on the balance sheet I think theres about <unk> 20 trillion yen asset and liability are recorded and then if we streamline that.

And regarding the a Z.

The merger.

The negotiations as has been announced.

As our business our capital allocation.

The negotiations are.

Will it become easier to handle.

Not progressing at the moment.

On the other hand in our financials.

But the strategy itself, India on a long term basis is has a great growth potential.

By.

Speaker Change: They can of course have tried to grow on their own because they're going to become a listed company. So for both companies I think this will be a win win situation that is our aim.

It's a very appealing market. Therefore, we are we'll try to seek various opportunities and if we can find.

Speaker Change: And regarding the a D a.

Another opportunity that would.

The merger.

Speaker Change: The negotiations as has been announced.

Replace a this type of plan.

We will look into that and we will also continue to look into organic growth.

Speaker Change: The negotiations are not progressing at the moment.

Speaker Change: But the strategy itself, India on a long term basis is has a great growth potential.

And our strategy are the amount of money that was expected to be used for that merger well.

Uh huh.

Speaker Change: It's a very appealing market. Therefore, we are we'll try to seek various opportunities and if we can find.

Investment wasn't.

Isn't going to change your capital allocation.

Or it will not change our behavior in our investment and so at the moment, we don't have any concrete plans.

Speaker Change: Ah another opportunity that would.

Speaker Change: Replace a this type of plan.

Speaker Change: We will look into that and we will also continue to look into organic growth.

Well it can move to the next question.

Charles Croson from Newsweek's Youre next.

Speaker Change: And our strategy.

Speaker Change: The amount of money that was expected to be used for that merger well that.

Ah, Yes, my name's zero car from new specs and I Hope you can hear me, yes, we can't hear you very well first question is about the gaming business over the last few years, you had a shortages of AR smart chips semiconductor chip supply resolved that problem, but then to be.

Speaker Change: Investment wasn't.

Speaker Change: Isn't going to change your capital allocation.

Speaker Change: Or it will not change our behavior in our investment so at the moment, we don't have any concrete plans.

The smartphone chip is becoming more difficult to purse additional value by miniature our lives engage in the past if you wait for two or three more years more advanced C. T. G T like our can reduce the energy consumption, but at much lower prices. So you could do that right. So the hardware itself.

Speaker Change: Well it can move to the next question.

Speaker Change: Geography from Newsweek's Youre next.

Zero Car: Ah, Yes, my name's zero car from new specs, but you can't hear me, yes, we can hear you very well first question is about the gaming business over the last few years, you had a shortage of a smart chips, all semiconductor chip supply resolved that problem, but then to be.

You can sell that to a 30000 in general so you could take that strategy, but right now for five or three nanometers, you know if youre trying to get those miniature lives a semiconductor chops, you'll become more expensive so taking that strategy become more expensive more complicated but at the same.

Speaker Change: The smartphone chip is becoming more difficult to produce additional value by many trial I think it's in the past if you wait for two or three more years more advanced C. T. G T like our can reduce their energy consumption that much lower prices. So you could do that right. So the hardware itself are you.

Tom you could expand on the network to have a different ways to develop the G. P O or do you think still we need to rely on hardware with the pricing. So that you can wisely you know sell them do you do you still not giving it up that option. So that's my question second question is.

Speaker Change: Can sell I talked 30000 in general so you could take that strategy, but right now for five or three nanometers, you know if youre trying to get those Mitra lives a semiconductor jobs, you'll become more expensive. So I'm, taking that as routers would become more expensive more complicated but at the same.

About cash flow a several years ago years ago, you had a 40, a 4 billion near the kind of cash flow.

But right now its operating cash flow because of many reasons it was off a quite behind the plan.

Speaker Change: Tom you could expand on the network to have a different ways to develop the G. P O or do you think still we need to rely on hardware with the pricing. So that you can wisely you know self do you do you still not giving it up that option. So that's my question second question is.

Corporate spreads are gone.

Plans, but our operating.

Cash flow will be the driver of where you are to make our investments. Therefore would you become slightly hesitant to make them but.

Speaker Change: Cash flow for several years ago years ago, you had a 40 a full building.

Less of an investment or would you go into like a reduced inventory there are other ways to increase cash right. So do you think allocations of capitalized because previously it is going to be possible. There are also financing where there are many different options to manage their cash right. So currently can you talk a little bit more context about how do you see.

Speaker Change: Our cash flow.

Speaker Change: But right now its operating cash flow because of many reasons it was off a quite behind the plan.

Speaker Change: Corporate spreads are gone.

Speaker Change: Plans, but our operating costs.

About our use of cash how much cash that you could generate and invest well first question about her budget in house, there's a structural issue as you have pointed it out.

Cash flow will be the driver of where you are to make our investments. Therefore would you become slightly hesitant to make them better.

You said it exactly right P. S. Five today is using nano pie that is on single single digit in a past P. S. Four over the previous version.

Speaker Change: Make a less of an investment or would you go into like a reduced inventory there are other ways to increase cash right. So do you think allocations of capitalized because previously is going to be possible. There are also financing there are many different options to manage their cash right. So currently can you talk a little bit more context about how.

Chip shrink benefits it is very difficult to come by unlike a little older in the ratio and therefore cost reduction was very difficult simply put right.

Speaker Change: Do you see about a use of cash how much cash that you could generate.

If I simplify because myself now ourselves rather to you know we used to had us tier discount, but we do not want soup rely on that we wanted to make sure our business is profitable as real as it where you want to focus on user engagement together with the volume of sales of units you need to.

Speaker Change: Invest well first question about her budget.

Speaker Change: There is a structural issue as you have pointed it out and you said it exactly right P. S. Five today is used.

Speaker Change: He's using nano pie that is on single single visit.

Speaker Change: In the past peer for let's say previous version.

Strike a nice balance between all those components so generation from P. S. Four to five one of the biggest differences are we shifting more focus on network service that's one.

Speaker Change: Chip shrink benefits it is very difficult to come by unlike a little older in the ratio and therefore cost reduction was very difficult simply put right.

And from peers for two P. S. Five.

We can continue to handle but consume customers. So user engagement is something that we want to sustain so that we can sustain the level of the.

Speaker Change: If a simplified explanation now ourselves rather too.

You know we used to had us tier discount, but we do not want Super lie on that we wanted to make sure our business is profitable as real as it where you want to focus on user engagement together with the volume of sales of units you need to if there's a strike a nice balance between all those components. So generation from <unk> 45.

That will be the most critical things in our business right now now Oh plan for the the hardware that is like a one is a commercial strategy that gets to do what the commercial strategy kind of what would be the the right pricing for customers.

Speaker Change: One of the biggest differences that we shifted more focus on networks, obviously, that's one area.

But whatever that might be you have to you cannot enjoy game without client device in your hand, so in that sense, our peers porthole would be one device that we just came up with a kind of about what the experiments, but we are getting some feedback we are hoping to get more feedback.

Speaker Change: From peers for two P S five.

Speaker Change: We can continue to handle but consume customers. So user engagement is something that we want to sustain so that we can sustain the level of <unk> that will be.

Speaker Change: The most critical things in our business right now now Oh plan for the the hardware that is like all one is the commercial strategy that gets to do what the commercial strategy kind of what would be the the right pricing for customers and but whatever that might be.

We can get those feedback while customers using them. So that our services are now net walked him a mature if I fall by receiving those feedbacks.

The other question that you raised was on the cash flow that is as you said it rightfully. So we had about four 2 billion and I'll be the yen is cash flow in a sample of.

Speaker Change: You have to you cannot enjoy game without client device in your hand, so in that sense.

Five or three years ago this year.

Speaker Change: P. S portal would be one device that we just came up with.

<unk> cash flow is a relatively lower but walking capsule is actually have grown quite a bit.

Speaker Change: Is that kind of dealt with they experiment, but we are getting some feedback we are hoping to get more feedback, but we can get those feedback while customers using them. So that our services are now network in a mature if I evolve by receiving those feedbacks.

You just cut it off in three years. It may look like all of our operating come slower, but inventory levels can be reduced or we can collect our accounts payable and a weekend I'll get the cash so in a big hands, there's no major change and I would say you are.

Speaker Change: Now the other question that you raised was on the cash flow that is as you said it rightfully. So we had about four 2 billion and I'll be the yen is cash flow in a sample of <unk>.

You can actually understand it like that and if you look at the way the rating agencies, we do actually have more opportunity for financial leverage should it needs to if required. We can also take that that's an option.

Speaker Change: Three years ago this year.

<unk> cash flow is relatively low but walking capsule is actually have grown quite a bit if you just cut it off in two years. It may look like on our bidding comes slower but inventory levels can be reduced or we can collect our accounts payable and a weekend.

Yeah.

Next question.

Amazon from Nippon cargo shipments please.

Speaker Change: I'll get the cash so in a big fans. There is no major change in I would say you are.

Thank you <unk>.

Mccann Koga symbol and can you hear me, yes, we can.

Speaker Change: Yeah.

Thank you.

Speaker Change: You can actually understand it like that and if you look at the way the rating agencies, we do actually have more opportunity for financial leverage should it needs to.

Easy and this camera I have two questions regarding the camera the first question.

Bye.

Jason by market.

Speaker Change: If we were required we can also take that that's an option.

For China.

Speaker Change: Okay.

So it was a unit says volume was larger than you.

Speaker Change: Next question.

Forecast lots about other markets North America, Europe and domestic in Japan.

Speaker Change: And based on ceramic and cargo shipments please.

Speaker Change: Thank you.

It's a trend.

Speaker Change: Mccann Koga symbol and can you hear me, yes, we can.

Of the cells and a second question.

Is the level of inventory.

Speaker Change: Thank you.

T in the segment as a total as of the end of December.

Speaker Change: Easy and this camera I have two questions, So Rick and David camera. The first question.

Reduction in the inventory as compared to the same periods last year, what about the inventory levels camera.

Speaker Change: Bye.

Speaker Change: Hey, Jason by market.

Speaker Change: For China.

These are my two questions. Thank you. Thank.

Thank you for your questions.

Speaker Change: So it was a unit says volume was larger than forecast.

Fast.

E T and air segment, and they're talking about camera.

Speaker Change: Broadcast lots about the other markets North America, Europe and domestically in Japan.

And what is a market trend wash your question, China has been doing well and for the third quarter.

Speaker Change: It's a trend.

Speaker Change: Of the cells and a second question.

North America, and European market had been moving rather it relatively well the inventory itself.

Speaker Change: Is the level of inventory.

And the segment as a total as of the end of December.

Speaker Change: Reduction in the inventory as compared to the same periods last year, but that's about the inventory level of camera.

There's no particular problem in the inventory level.

The level that we are satisfied with and we are able to maintain that inventory level.

Speaker Change: These are my two questions. Thank you.

Speaker Change: Thank you for your questions.

Yeah.

Speaker Change: Fast.

Speaker Change: E T and S segment, and they're talking about camera.

And I think we don't have much time left I think the next question will be the last question from.

Speaker Change: And what is a market trend last your question, China has been doing well and for the third quarter.

From the Yomiuri Shimbun My office on please.

Speaker Change: North America, and European market had been living rather it relatively well.

And when I say for me only wish Shimbun.

Okay.

Oh, sorry. This is a different question. This is about the Nikkei average.

Speaker Change: Factory itself.

Speaker Change: There's no particular problem in the inventory level at the level that we are satisfied with and we are able to maintain that inventory level.

And I believe that it is the highest record high.

Are we expecting this I'm sure the investors have a lot of expectations towards the Sony group or how do you feel about this.

Speaker Change: I think we don't have much time left I think the next question will be the last question from.

And thank you for the question.

Since the beginning of this year overseeing this AR increase.

Speaker Change: From the Yomiuri Shimbun My office on please.

Speaker Change: And when I say for me only wish Shimbun.

Increase significant increase quite frankly I myself.

Speaker Change: Okay.

Speaker Change: Sorry. This is a different question. This is about the Nikkei average.

Did not expect this kind of trend.

So in that sense I'm sorry.

Speaker Change: And I believe that it is the highest record high.

I kind of regret that that my forecast didn't.

Speaker Change: Are we expecting this I'm sure the investors have a lot of expectations towards the Sony group, but how do you feel about this.

Come through but I'm very happy that the market's expectation of us.

Speaker Change: And thank you for the question.

<unk> is quite high and we hope to make sure that we don't under perform.

Speaker Change: Since the beginning of this year, we're seeing this in.

Against that type of expectation and to demonstrate our growth and development. Thank you.

Speaker Change: Increase significant increase quite frankly I myself.

Since it's time, we'd like to conclude the Q&A session with the media.

Speaker Change: Did not expect this kind of trend.

Speaker Change: So in that sense I'm sorry.

A Q&A with investors and analysts.

Speaker Change: I kind of regret that that my forecast didn't.

We will start at a 447.

Speaker Change: Come through but I'm very happy that as that market's expectation of us.

Yeah.

Speaker Change: It's quite high only helped to make sure that we don't under perform.

Okay.

[music].

Speaker Change: Against that type of expectation and to demonstrate our growth and development. Thank you.

Speaker Change: Okay.

Speaker Change: Since it's time, we'd like to conclude the Q&A session with the media.

Speaker Change: A Q&A with investors and analysts.

We will start at 447.

Speaker Change: Yeah.

Speaker Change: [music].

Yes.

Speaker Change: [music].

Uh huh.

Hum.

Mhm.

[music].

Yeah.

Yeah.

Yeah.

Yeah.

[music].

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

[music].

Okay.

[music].

Hum.

Okay.

Speaker Change: Yes.

Speaker Change: [music].

[music].

Yeah.

[music].

We will soon be starting question and answer session with Investor and all of US. Please give us a few more moment, while we get started.

Speaker Change: We will soon be starting question and answer session, where the investor and analyst. Please give us a few more moment, while we get started.

Thank you for waiting we'd like to now start questions from investors and Dallas office, facilitating just meeting the fashion.

My name is condo from IR group very good to see you all.

Respondents just like our media sessions are being going to be responded by three of them on slide <unk>.

And please note about the information that we have distributed to you ahead of time about how to use telephone how to control it and other things to be careful about and are you can only ask up to two questions per person will start if you have question.

Speaker Change: Thank you for waiting I'd like to now start questions from investors and analysts of the facilitating just meeting the fashion.

Please plus asterix followed by number one.

IR group: My name is content from IR group very good to see you all.

IR group: Respondents just like our media sessions are being going to be responded by three of them on slide <unk>.

What's that.

I'd like gas cuts rahsaan from S ambition nickel shell, Canada Trask, yes. Thank you, yes, my name's Scott Searle from Nice N B C. Nicole I like that yes ask two questions. First question is about an eye on that SaaS why fourth quarter invest free inventories like your plan is going to be shrinking the invent.

Content: And please note about the information that we have distributed to you ahead of time about how to use telephone how to control it and other things to be careful about and are you can only ask up to two questions per person will start if you have question.

Tree level, but there is looking at the slide seven of the 10 them. While you are showing how much inventory that you were expecting but how much are you planning to assuring could you can you give any idea about how small the inventory level is going to be.

Content: Please proceed asterix followed by number one.

Speaker Change: What's that.

Speaker Change: I'd like gas cuts rahsaan from S ambition nickel shell, Canada Trask.

19 talks all about utilization. So maybe you can do that calculation about that but can you also talk about how we should interpret it. After Q1 next year second question for the next year a game on networks obvious pictures and.

Rahsaan: Yes. Thank you, yes, my name's hats off on F. N B C. Nicole I like that yes ask two questions. First question is about an eye on their SaaS why fourth quarter invest fee inventories like your plan is going to be shrinking the inventory level, but there is looking at that slide seven that send them while U S show.

I think you mentioned back then in those sections.

Nicole: How much inventory that you are expecting but how much are you planning to assuring could you can you give any idea about how small the inventory level is going to be.

You made about you know aiming at certain levels by Cal you also talk about other segments about a similar perspectives on the other segments as well.

Nicole:

Okay. Thank you very much for your question I NSS fourth quarter AR inventory to that question.

Nicole: 19 talks all about utilization. So maybe you can do that calculation about that but can you also talk about how we should interpret it. After Q1 next year second question for the next year.

Well.

In terms of you know.

That.

Two three.

Nicole: Game on networks obvious pictures and I think you mentioned back then in those sections.

Three quarters levels is actually quite a small level. So the impact overall is quite limited in general I would say it will end up to about being flat.

Nicole: You've made about.

Nicole: Aiming at certain levels by can you also talk about other segments about similar perspectives and other segments as well.

Flat.

Flat or plus incremental small addition on top of third quarter.

Speaker Change: Okay. Thank you very much for your question I NSS fourth quarter AR inventory.

Now you asked also about the inventory level for the next financial year.

Speaker Change: To that question.

Now we are expecting our topline growth to grow.

Speaker Change: Ah well.

Speaker Change: In terms of.

And so.

Speaker Change: That too.

Inventory also grow as fast as the topline.

Speaker Change: Through.

Speaker Change: Three quarters' levels is actually quite a small level. So the impact overall is quite limited in general I would say it will end up to about being flat.

That should be covered during the AR.

Business planning process for next financial year, and I Hope that is good enough for my answer to your question now for FY 'twenty for in General what I'd talked about yes, I had mentioned about a game.

Speaker Change: Uh huh.

Speaker Change: That plus incremental small addition on top of third quarter.

Speaker Change: Now you asked also about the inventory level for the next financial year, and we are expecting our topline growth to grow and so our.

Pictures I NSS, yes, I mentioned about them for a perspective for FY 'twenty 'twenty four for music.

Mark at a on a streaming.

Inventory will also grow as fast as the topline, but that should be covered during the.

Oh, hi digit or a mid digit.

A single to mid two does it what's the growth or we hope to grow faster than that that so finance.

Speaker Change: Business planning process for next financially and I hope that is good enough for my answer to your question now for FY 'twenty for in General what I'd talked about yes, I had mentioned about a game.

Well.

The base profit level is going to gradually slowly grow.

Speaker Change: Pictures I NSS.

Speaker Change: Yes, I mentioned about them for a perspective for FY 'twenty 'twenty four for music.

It's going to take some time right, but the new policy amount is going up too. So it's not changed since I, it's going to be keep growing.

Speaker Change: Market on a streaming.

Speaker Change: <unk> high digit or a mid digit.

In a steady or gradual above raw, but because of adoption of ifr's, we have to do Bruce catching because there can be volatility because of the change of the AR.

Speaker Change: A single to mid two does it was that growth and we hope to grow faster than that.

The standards that that is the risk we are going to be investing some cost. Therefore, we believe relatively gradual.

Speaker Change: So finance.

Speaker Change: Well.

Speaker Change: The base profit level is going to gradually slowly grow it.

<unk> gross for fight US Pictures, I actually mentioned, it already flat or plus incremental on top.

Speaker Change: It's going to take some time right, but the new policy amount is going up too. So it's not changed since I, it's going to be keep growing.

You're flat a full picture like I said, but any case, we will be giving that next finalized guidance during the springtime. So we hope to cover more details at that time. Thank you.

Speaker Change: In a steady or gradual above loss, but because of adoption of ifr's Ah we have to do with catching because that there can be volatility because of the change of the.

Yeah.

Speaker Change: Standard that that is the risk we are going to be investing some cost. Therefore, we believe relatively gradual very gradual growth for finest pictures I actually mentioned, it already flat or plus incremental on top.

Next question, Okay that stem from the Nomura Securities and Okazaki from Nomura Securities.

Game I have questions regarding game Emma.

M E U.

Became.

Record high level P. S. Five cumulative says is already exceeding so.

Speaker Change: Ah you're flat.

Speaker Change: Full picture like I said, but in any case, we will be giving that next finalized guidance. During the spring time. So we hope to cover more details at that time. Thank you.

<unk> five alone will not be able to satisfy that why is it EMEA you has grown to this level.

Can you please explain a bit more in detail. Emma you use is it may take for user engagement and an important metric.

Speaker Change: Yes.

Speaker Change: Next question <unk> from Nomura Securities.

Speaker Change: Because I came from Nomura Securities.

Well M. A U is increasing in the fourth quarter. The profit is not as much as expected EMEA you increases, but the profit that was not as high but what is the background for this thank you for your question first.

Nomura Securities: Jane I have questions regarding game.

Speaker Change: You bet.

Speaker Change: Became.

Nomura Securities: Record high level P. S. Five cumulative he says is already exceeding so P. S. Five alone will not be able to satisfy that why is it EMEA you has.

For you guys to M E U.

So I think theres seasonality third quarter is the holiday season, so their seasonality factor and then.

Nomura Securities: It has grown to this level.

Nomura Securities: Can you please explain a bit more in detail M. A U is it may take for user engagement and an important metric.

Free to play titles, and we had a big hit.

So we are enjoying benefits from that.

Speaker Change: Well M. A U is increasing in the fourth quarter. The profit is not as much as expected.

These are the two major factors drivers for increasing the MAA.

And then engagement metric.

Speaker Change: Greece's, but the profit that was not as high but what is the background for this.

Third quarter.

I already explained a bit special factors were there.

Speaker Change: For your question first with regards to M E U.

And about 30 billion of.

Speaker Change: So I think theres seasonality third quarter is the holiday season, so their seasonality factor and then.

Profit Derby to us it will be shifted to the fourth quarter from the third quarter P. S. Five inventory valuation related number.

Free to play titles, and we had a big hit.

In the second half and the second half it'll be leveled, but if you only look at the third quarter the profit level as it appears they slightly less than what it actually is.

Speaker Change: So we are enjoying benefits from that.

Speaker Change: These are the two major factors drivers for increasing M. A U S.

Speaker Change: And then engagement metric.

Speaker Change: Third quarter.

Speaker Change: I already explained a bit special factors are there.

Our next question.

From Mizuho Securities knock on this huh.

Speaker Change: And about 30 billion of profit.

Speaker Change: I prefer to be to us it will be shifted to the fourth quarter from the third quarter. He has five inventory evaluation.

Thank you.

<unk> from Mizuho Securities I have two questions.

My first question.

To Mr. Total key the first question is as follows.

Speaker Change: Number.

Speaker Change: In the second half and the second half it'll be leveled, but if you only look at the third quarter the appropriate level as it appears it slightly less than what it actually is.

It's four months since he became president.

What.

Have you noticed a realized since you'd be African the president.

That's a quarter, there's no first party large first parties, but the W. Three C titles going to be half.

Speaker Change: Our next question.

Mizuho Securities: From Mizuho securities knock on its own.

Now in 'twenty 'twenty FY 'twenty 25, what kind of measures are you considering.

Speaker Change: Thank you.

Mizuho Securities: <unk> from Mizuho Securities I have two questions.

Mizuho Securities: The first question.

Mizuho Securities: To Mr. Total key the first question is as follows.

If you can share with us your.

Mizuho Securities: It's four months since he became president.

Impressions. The second question is its about a return to the shareholders I understand that a strategic.

Mizuho Securities: Good.

Mizuho Securities: Have you noticed a realized since Ub havoc on the president.

The strategic investment is going to become slightly lower.

Mizuho Securities: Yes.

Mizuho Securities: Quarter Theres No first party large first parties.

So basically.

Mizuho Securities: The W. Three C titles going to be half.

I understand that your measures of.

Mizuho Securities: Now in twin T 20, FY 'twenty 25, what kind of measures are you considering.

Investment will not change significantly, but if you have any comments on that point.

Thank you very much for your question.

Mizuho Securities: If you can share with us.

I E I actually am the chairperson.

Mizuho Securities: Impressions. The second question is I mean, it's.

Mizuho Securities: About a return to the shareholders.

It's been about four months.

And I Oh.

Speaker Change: I understand.

Speaker Change: Strategic investment is going to become slightly lower.

I'm trying to demonstrate our leadership.

And trying to have as many meetings as possible with our management team and also visit.

Speaker Change: So basically.

Speaker Change:

Studios.

Speaker Change: I understand that your measures of.

And.

Speaker Change: Investment will not change significantly, but if you have any comments on that point, yes. So thank you very much for your question is I E.

Everyone is working really hard.

To fulfill their responsibilities to trying to optimize the business and I understand that.

Speaker Change: Actually on the chairperson.

Speaker Change: It's been about four months.

Overall.

Speaker Change: And I.

Our growth overall growth and sustainable profitability.

Speaker Change: I'm trying to demonstrate leadership and trying to have as many meetings as possible with our management team and also visit.

Our increasing margin how will that translate to these goals.

Speaker Change: Two deals.

Goes I don't think people understand that.

Speaker Change: And.

And deeply I think that is the problem of the organization so as far as I'm concerned I T.

Speaker Change: Everyone is working really hard.

Speaker Change: To fulfill their responsibilities to trying to optimize the business and I understand that.

Try to understand what is happening in the company in the industry and also the perspective other analysts.

Speaker Change: But overall.

Speaker Change: Our growth overall growth and sustainable profitability or increasing margin.

And tried to explain in a transparent manner. So that people can recognize and notice of these.

Speaker Change: How will that translate to these.

Issues. So that we can have a harmonized approached approach going forward.

Speaker Change: Goes I don't think people understand that.

That.

Speaker Change: Yeah.

Is a very general comment.

Speaker Change: And deeply and I think that is the problem of the organization so as far as I'm concerned I.

Since I became the chairperson conquer.

Concrete.

Speaker Change: Try to understand what is happening in the company in the industry and also the perspective other analysts.

Points, which I will not go into today.

No about.

Speaker Change: And tried to explain in a transparent manner. So that people can recognize and notice of this.

Visiting the studios.

And bouncy and I've had meetings with our leaders the studios people who work in our studios have very high motivation there very highly motivated they're very good people.

Speaker Change: Issues. So that we can have a harmonized approached approach going forward.

Speaker Change: Is that.

Speaker Change: Is a very general comment.

And they're very creative people that have great creative mind.

Speaker Change: Since I became the chairperson conquer.

And they also have knowledge about the live streaming.

Concrete.

Yeah.

Speaker Change: Points, which I will not go into today.

However, having said that.

When it comes to the business itself I think there is room for improvement.

Now about.

Speaker Change: Visiting the studios.

And.

That's got to do about how to use the money or about the schedule of development or how to fulfill one's accountability towards.

Speaker Change: And a lot bouncy and I've had meetings with the leaders the studios people who work in our studios have very high motivation there very highly motivated they're very good people.

Development et cetera, those all my Frank.

Speaker Change: And they're very creative people that have great creative mind.

Impressions, so I will continue to engage in dialogue with.

And they also have knowledge about the live streaming.

With the people so that we can find the right.

Speaker Change: However, having said that.

Wait to proceed no shareholder returns and dividends.

Speaker Change: When it comes to the business itself I think there is room for improvement.

As you mentioned no major change there.

Speaker Change: And.

Speaker Change: That's got to do about how to use the money or about the schedule.

Yeah.

We.

Speaker Change: The development or how to fulfill one's accountability.

We'll have to deal with and shareholder returns are.

Speaker Change: Woods.

Speaker Change: Development et cetera, those all my Frank.

Honest way to and that is a part of the strategic investment.

Speaker Change: Impressions, so I will continue to engage in dialogue.

Speaker Change: With the people so that we can find the right.

And.

We believe that is the solution is considered to be the optimum solution. Then we will go ahead with that solution.

Speaker Change: Way to proceed.

Speaker Change: No shareholder returns and dividends.

As you mentioned no major change there.

Now let me move to the next question.

Black Das Guthrie's hung from UBS Securities two asks per next question. Please.

Speaker Change: We.

Speaker Change: We'll have to deal with shareholder returns.

Oh, thank you.

And from UBS.

Speaker Change: Uh huh.

Security I have two one ask two questions.

Honest weight and that is a part of the strategic investment.

So basically it's a single question operating profit.

Speaker Change: And we.

Speaker Change: We believe that is the solution is considered to be the optimum solution. Then we will go ahead with that solution.

You know game and semiconductor they were actually topline is growing at about the profit level is not really growing up.

They respect over three years for not what are the things that you think you know took Tucson, what do you think you need to have a you know whether it's possible or not is there any particular initiative angle that you want to get out to improve the bottom line was the only top line.

Speaker Change: Now let me move to the next question.

Black Das carefree Sun from UBS Securities. Two asks the next question. Please.

Black Das: Oh, thank you.

Black Das: You'll see from UBS.

Black Das: Security I have two one ask two questions.

Black Das: So basically it's a single question operating profit.

Thank you for gaming gesture.

UBS Securities: You know game and semiconductor they are actually topline is growing but the profit level is not really growing up.

It was a profit margin, especially the operating margin was not really a you know wonderful.

Asian, well, partly because we are currently in a transitional where the P. S. Five hardware units are expanding.

UBS Securities: They respect over three years for not what are the things that you think you know touches on what you think you need to have a you know whether it's possible or not is there any particular niches scherbo angle that you want to get at to improve bottom line was the only top line.

A process, but what we need to manage is a peaceful and our previous general unlike peers for our previous generations Consol's AR. If you look at the console cycle.

Speaker Change: Thank you for gaming gesture.

Our cost reduction within the cycle is very difficult to come by and that is a big challenge because if you think about P. S console device Oh, my God highs back for Frication, our computers, that's affordable price will be what they are very safe comfort.

Speaker Change: It was a profit margin, especially the operating margin was not really.

Speaker Change: Wonderful.

Speaker Change: Ration well, partly because we are currently net transitional where the P. S. Five as a hardware units are expanding.

Speaker Change: A process, but what we need to manage is a peaceful and our previous general unlike peers for our previous generations Consol's AR. If you look at the console cycle.

Bull environment with their very great experience, that's wonderful things about playstations, but compare to the past in order that the cost for building out the experiments memories chipsets you know the prices of the cost of all those components are going up as a fact.

Speaker Change: Cost reduction within the cycle is very difficult to come by and that is a big challenge because if you think about P. S console device.

And how can we given desperation can put our product plans together to make it affordable.

Speaker Change: Oh, my God highs back for Frication comp.

So that's without relying on steep discounts to reasonably you sell them to continue our commercial journey on the sustainable basis I personally thank god that in.

Speaker Change: Computers, that's affordable price, while b with the very safe comfortable environment with their very great experience, that's wonderful things about playstations, but compare to the past.

Important.

Speaker Change: In order that the cost for buildings that they experience memory chipset.

As an opportunity in that and that's how I see it and the other potential driver is the first party title generation.

Speaker Change: The prices of the cost of all those components are going up as a fact.

Speaker Change: How can we given desperation can put our product plans together to make it affordable.

Because in the past as you all know.

We wanted to pop it a lot of eyes console and Ah the title was something.

Speaker Change: So all of that.

Speaker Change: Without relying on steep discounts to reasonably you sell them to continue our commercial journey on a sustainable basis I'd boy personally thank God that's <unk>.

The first party title main purpose was to make the hardware or the console popular right. It is true right, but but there's a synergy to it. So if you have a strong.

Speaker Change: Important.

There is an opportunity in that and that's how I see it and the other potential driver is the first party title generation.

First party content not only with our console, but also other platform like computers and a first party can be grown with multi platforms that can help operating profit to improve so that's another one that where you wanted to probably where you work hard I personally think they were up.

In the past as you all know we.

Speaker Change: We wanted to pop it a lot of eyes console and the title was something.

Speaker Change: The first party title main purpose was to make Dara hardware or the consoles popular right. It is true right, but there is a synergy to it. So if we have a strong.

<unk> is out there for improved mental marching so we'd like to go aggressive from improving our margin performance.

Now to our I N S F.

Ah.

Speaker Change: First party content.

So far in the past a warranty.

Speaker Change: Not only with our console, but also other platform like computers and a first party can be grown with multi platforms and that can help operating profit to improve so that's another one that where you want to project, where you work hard I personally think there are opportunities out there.

Capital investment comes together, but our Celsius now recouping, what we have and invest that that's basically what we had that problem.

Because for US we need to focus on minimizing operating loss, we need to also manage the investment plans. So the cost and the best opportunities needs to be meeting at the right balance.

Speaker Change: For improved mental marching so we'd like to go aggressive from improving our margin performance now to I N S F.

But but.

It is as in the past as you all know sensors is first of all mobile and SASSA, Let's say Ah is becoming a larger format.

Speaker Change: Uh huh.

Speaker Change: So far in the past a warranty.

Speaker Change: Capital investment comes together, but our Celsius now recouping, while we have invest that that's basically what we had that problem.

And also what's driving the other things about the prices like of having more cameras and better so more cameras as well as a virtual format of the answer.

Speaker Change: Because for US we need to focus on minimizing operating loss, we need to also manage the investment plans are.

<unk> requires having a bigger capacity, but a larger format as well as more camera small lenses in smartphone is that going to continue forever.

Speaker Change: So the cost and the best opportunities and needs to be meeting at the right balance.

Speaker Change: But.

Speaker Change: It is as in the past as you all know.

Probably not.

Speaker Change: Sensors is first of all mobile and SASSA, let's say Ah is becoming a larger format.

<unk> maintained at the level of today, but having more functionalities to bet right. So having higher functionality is something that is meant down demand that how can we build that high functionality I think without too much redundancy in a process that is a question right because if he can address that I think.

Speaker Change: And also what's driving the other things about the prices like having more cameras and better so more cameras as well as a larger format Oh, yes answer.

Speaker Change: <unk> requires having a bigger capacity, but a larger format as well as more camera small lenses in smartphone is that going to continue forever.

The more profit margin that's going to go up thank you.

Time is running short so I'd like to ask the question is can be is.

Please limit yourself to one question per person next question. Please bugger Saturday M FDA securities on assemblies.

Speaker Change: Okay.

You're not.

Speaker Change: <unk> maintained at the level of today, but having more functionality is too bad right. So having higher functionality is something that is meant down demand that how can we build that high functionality I think without too much redundancy in a process that is a question right because if he can address that.

Thank you.

From Morgan Stanley about game I have one question.

Next fiscal year.

Slight increase in profit that you are expecting.

Speaker Change: The more profit margin, it's going to go up thank you.

It.

278 billion this year and in the past the big with more than 300 billion. So the big in FY 'twenty, one with a P. S. Five it's very difficult to exceed the peak levels 300 in 'twenty, one I may be asking the question but.

Speaker Change: Time is running short so I'd like to ask the question is can be.

Speaker Change: Please limit yourself to one question per person next question. Please bugger Sally <unk> Securities <unk> San please.

Sally: Thank you well know from Morgan Stanley about game I have one question.

<unk> you.

123 million needs to be increased.

Sally: Next fiscal year.

And the further.

Sally: A slight increase in profit you're expecting.

Is it possible to.

Exceed the peak in profit level, especially in the cycle that fifth year is the peak of the hardware and six year is that vehicles hardware and seventh year is the peak of the margin that was a cycle as I understand this in the past. So six year next year will be the six year of the release and a softer.

Sally: It.

Sally: 278 billion this year and in the past the big with more than 300 billion. So the big in FY 'twenty, one with a P. S. Five it's very difficult to exceed the peak levels three hand, it in 'twenty, one I may be asking the question but.

Here, mainly is if it is third party E L F.

Sally: <unk>.

Sally: $123 million is to be increased.

It is regrettable, but how should we interpret this can you. Please explain thank you.

Sally: And it further.

Sally: Is it possible to.

Well P S. Four.

Sally: Exceed the peak in perfect level, especially in the cycle. The fifth year is the peak of the hardware and six year is that vehicles hardware and so it was a year is the peak of the margin that was a cycle as I understand they've seen in the past. So six year next year will be the big fear of the release and the software.

It can be one big refresh for us.

Under COVID-19.

We had the COVID-19 team period. So we can have decorated say fifth year six year and seventh year for P. S. Five there may be some argument.

Sally: Mainly is if it is third party a.

Lodging.

What was the appropriate level.

Speaker Change: I think they say regrettable, but how should we interpret this can you. Please explain thank you.

Absolute amount of profit is to be increased and for that is that it is challenging but I'd like to try and increase.

Speaker Change: Well Pearce for.

At the time of peace compared to peers five mark.

Speaker Change: It can be one big refresh for us.

T cells, including the third party titles.

Speaker Change: Under COVID-19.

The COVID-19 time period. So we can a decade say 56 year and seventh year for P. S. Five there may be some argument.

Our market is increasing four appears fight, but the profitability of hardware is higher for our peers for it.

So with one cost will not decrease with a Newcastle so how we can.

Speaker Change: Lodging.

Speaker Change: What was the perfect level.

Speaker Change: Absolute amount of profit is to be increased and for that is that it is challenging but that I would like to try and increase.

Hit the balance with emerging and continue to spread.

Disseminate it P. S. Five is important and second point.

At the time of peace compared to peers five.

This fiscal year and next fiscal year.

Speaker Change: Market itself, including the third party titles.

The Costa acquisition cost of the past is also incurred so as the acquisition related cost burden decreases that to become a factor for the increase in profit so.

Our market is increasing for a fist fight, but the profitability of hardware is higher for P. S. Four.

Speaker Change: So with one cost will not decrease with the Newcastle so how we can.

We have to think this in an integrated fashion.

And in the era of PS five.

Speaker Change: Hit the balance with emerging and continue to spread.

Lee.

I do not think that I am not going to give up and renewed the peak. So in the next midrange plan redacted talent and try to exceed the peak of the past.

Emanate Aps five is important and second point.

This fiscal year next fiscal year.

The Costa acquisition cost of the past is also incurred so as the acquisition related cost burden decreases that to become a factor for the increase in profit.

The next person will be the last person to ask a question.

I am from J P. Morgan.

Speaker Change: So.

This is <unk> from J P Morgan Securities.

We have to think this in an integrated fashion.

Games.

You have been saying.

Speaker Change: And in the era of PS five.

123 million of the M. A U and you had a great hit with a free title.

Speaker Change: We I do not think that I am not going to give up and renewed the peak. So in the next midrange plan, that's the challenge and try to exceed the peak of the fast.

And I.

Understand that these are titles to which you invest.

Well regarding those games.

Speaker Change: The next person will be the last person to ask a question.

I think new mills have been added or you have a collaboration with Disney.

Speaker Change: It does sound from J P. Morgan.

Which are different.

<unk>: This is <unk> from J P Morgan Securities gains.

Expectations toward growth from that.

Games.

In the past.

Speaker Change: He has been saying.

Your perspective, these third party titles.

Speaker Change: 123 million of the M. A U and you had a great hit with three title.

Yeah.

What are your expectations toward those titles.

And as an investor what are your expectations and the profitability for games for next fiscal year.

Speaker Change: And.

Speaker Change: I understand that these are titles to which you invest.

Well regarding those games.

You didn't mention about the add ons.

Speaker Change: I think new mills have been added or you have a collaboration with Disney.

So what's happening there.

Thank you.

Speaker Change: Which are different.

Speaker Change: Expectations toward growth from.

Like you say.

And those titles are contributing significantly that's true.

Speaker Change: In the past.

Speaker Change: Your perspective, these third party titles.

Speaker Change: What are your expectations toward those titles.

Collaboration with other companies is something that we can't comment.

Speaker Change: And as an investor what are your expectations and the profitability for games for next fiscal year.

Well those companies.

Speaker Change: You didn't mention about the add ons.

Our our attractive companies.

Speaker Change: So what's happening there.

To which we would like to invest in it that's theory, it's a positive development for us and that collaboration.

Speaker Change: Thank you.

Speaker Change: Like you say.

We hope that that will generate an upside for us.

Speaker Change: And those titles are contributing significantly that's true.

And add on sales are for next fiscal.

Speaker Change: Collaboration with other companies is something that we can't comment.

Fiscal year.

Whether that is being reflected or not well the business plan.

Speaker Change: Well those companies.

It hasn't been a fixed yet so at this point in time, it's hard for me to comment on that point.

Speaker Change: Our our attractive companies.

Speaker Change: To which we would like to invest in theory, it's a positive development for us and that collaboration.

But the third party titles.

We'll.

If they grow that will be very positive.

Speaker Change: We hope that that will generate an upside for us.

For us and we hope to utilize that momentum take advantage of that momentum.

Speaker Change: And add on sales for next.

Since it's time.

We'd like to conclude the consolidated financial results announcement from Sony Group. Thank you very much.

Fiscal year.

Speaker Change: Whether that is being reflected or not well and the business plan.

Speaker Change: Hasn't been 60, yet so at this point in time, it's hard for me to comment on that point.

But the third party titles.

Speaker Change: Will.

Speaker Change: If they grow that will be very positive.

Speaker Change: For us and we hope to utilize that momentum take advantage of that momentum.

Speaker Change: Since it's time.

Speaker Change: We'd like to conclude the consolidated financial results announcements from Sony Group. Thank you very much.